Omodele Adigun
In the digital space, Zenith Bank has proved itself to be second to none. According to its Chairman, Mr. Jim Ovia, the bank remains a clear leader with its array of innovative products, solutions and alternative channels that put it ahead of competition. At its recent Annual General Meeting (AGM) in Lagos, Ovia told investors how the bank’s products, processes and people helped exploited opportunities that gave it impressive performance. Excerpts
Forex
The positive growth trajectory of the Nigerian economy, which began in 2017 after exiting recession, was maintained in 2018.Measured by the real Gross Domestic Product (GDP).The Nigerian economy grew by 1.93 per cent in 2018, up from 0.82 per cent in recorded in 2017, according to the National Bureau of Statistics (NBS).The goal of the monetary and fiscal authorities, to a large extent, was the attainment of sustenance of macro-economic stability. Thus the fiscal and monetary efforts resulted in the stability of the interest and exchange rates.
Similarly, the Naira remained relatively stable at the inter-bank foreign exchange (forex) market throughout the year. The Investors’ and Exporters’ forex window continued to bring some stability to the market and ensured increased availability of forx as it acted as a key driver of foreign portfolio investment inflow into the country.
Financials
Owing to a number of global and domestic factors, 2018 was a very challenging years for operators in the Nigerian banking industry. True to our track record, however, we were able to fully exploit the opportunities within the environment to record a performance that attests to our durability and resilience as a brand. Clearly, the results are, once again, a reflection of the exceptional financial health of the bank and the Group.
For the bank, total deposits was N2.82 trillion for the year ended December 31, 2018, representing a 2.9 per cent increase over the previous year’s figure of N2.74trillion.Profit before tax rose by 13.6 per cent, from N169 billion in 2017 to N192billion in 2018. Profit after tax similarly rose by 7.8 per cent, from N153 billion in 2017 to N165 billion in 2018.During the same period, total assets of the bank grew by 2.7 per cent from N4.83 trillion to N4.96trillion, while shareholders’ fund declined by 3.3 per cent, from N698billion to N675billion. Gross earnings similarly declined by 20.2 per cent from N674billion in year 2017 to N538 billion in 2018.
As a Group, the performance indices were no less remarkable. The Group profit before tax grew by 16.6 per cent, from N199 billion in year 2017 to N232 billion in 2018. Profit after tax thus grew by 10.9 per cent during the period., from N174 billion in 2017 to N193 billion in 2018, while customers’ deposits grew by 7.3 per cent during the same period, from N3.44 trillion to N3.69 trillion. The Group shareholders’ fund grew by 0.5 per cent, from N812billion in 2017 to N816 billion in 2018; gross earnings dropped by 15.4 per cent, from N745 billion in 2017 to N630 billion in 2018.
Dividend
Zenith Bank remained committed to delivering superior returns to our much-valued shareholders by ensuring that a good chunk of our profit is set aside for them. In clear demonstration of this, we had declared and paid an interim dividend of 30 kobo per share in the course of the 2018 financial year. We also paid a final dividend of 250 kobo which brought the total dividend to for the year ended December 31, 2018 to 280 kobo per share as against 270 kobo per share that was paid in the previous year.
Technology
The bank remains a clear leader in the digital space with several firsts in the deployment of innovative products, solutions and an assortment of alternative channels that ensure convenience, speed and safety of transactions in order to continue to cater to the varied appetites of our customers in a constantly changing world and stay ahead of the competition, therefore, we have invested massively in new technologies and innovative solutions in the last financial year. This is geared towards ensuring that we continue to provide best-in-class quality service that create value for all of our stakeholders.
CSR
Zenith bank made significant progress in its adoption and integration of sustainable banking principles into our business operations, especially the credit administration process. At Zenith Bank, sustainability goes beyond a regulatory requirement. It is the springboard to the future we desire.Hence, the bank is committed to reconsidering its business processes, products and services to ensure compliance with globally acceptable economic, environmental an d social norms.
Our CSR and community investments initiatives are targeted to align with the global objectives to end extreme povert and hunger, protect the planet and create sustainable wealth for all, in line with the United Nations’ Sustainable Development Goals (SDGs),Healthcare improvement, education and skills development, sports development, youth and women economic empowerment, as well as public infrastructure development formed the bedrock of our CSR endeavours.
Zenith Bank Plc as a forward looking bank has remained one of the biggest CSR contributors.
Our sustainability and CSR initiatives are hinged on the belief that today’s business performance is not all about the financial numbers, but the achievement of a balanced scorecard as demonstrated by an organization’s contribution to inclusive economic growth through improvements in the condition of the host communities and the larger environment.
Through our strategic CSR focus, we have been able to deliver projects that have long-term social and economic benefits for our host communities. In the course of the year, Zenith Bank made donations towards the well being of many individuals and healthcare organisations. In our quest to support government’s efforts at improving the standard of education and human capital development, we supported capacity building workshops and the setting up of ultra modern ICT centres in several educational institutions across the country, among others. We also encouraged youth development through our support for sports at the grassroots and professional levels. In addition to making donations to various state governments’ Security Trust Fund to improve security and safety of lives and properties, the bank sponsored various summits, conferences and seminars organized by governmental and non-governmental agencies targeted at creating platforms to improve policy making that will sustain economic growth across the local. State and federal levels.
Outlook
It is a known fact that Zenith Bank has maintained its culture of outstanding performance and industry leadership even in a very challenging operating environment.We are constantly monitoring developments in the local and global economic environment, and appropriately applying pragmatic and dynamic approaches to the banking business. Our strategic focus on the pursuit of shared prosperity has positioned us to seek and leverage new opportunities in the market. We recognize the demands and obligations that exist in the environment where we operate. This has continued to inform our commitment to sustainability principles and global best practices, anchored on good corporate governance and citizenship, and first=class risk management. It is a thread that runs through the fabric of our operations.
In 2018, the Federal Government sought to frame the budget to build on the Economic Recovery and Growth Plan (ERGP), the medium-term strategy for 2017-2020, designed to advance macroeconomic stability and economic diversification.
The proposed 2019 budget seeks to maintain the growth momentum in the ERGP.The aggregate expenditure proposed for 2019 is N8.83trillion, comprising capital expenditure of N2.03 trillion(inclusive of capital in statutory transfers), recurrent expenditure of N4.04 trillion, debt service of 2.14 trillion, statutory transfers of N492 billion, and sinking fund of N120 billion. The 2019 Federal Government budget is predicated on projected crude oil production of 2.3 million barrels per day; crude oil price of US $60 per barrel, and an average exchange rate of N305/dollar.The fiscal deficit is projected at N1.86 trillion or 1.3 per cent of GDP to be financed partly by new borrowings estimated at N1.65 trillion.
The Federal Government expects the economy, measured by GDP, to grow at 3.01 per cent in 2019, up from 1.93 per cent in 2018.The International Monetary Fund (IMF) and the World Bank, however, expect the Nigerian economy to expand by two per cent and 2.2 per cent respectively. The subdued growth outlook for the Nigerian economy in 2019 is based on expectations of a decline in oil revenue due to falling oil prices and crude oil production cap of 1.68 million barrels per day mandated by OPEC and non-OPEC producers.
The domestic and global economic environments remain susceptible to several vagaries. Subdued growth is expected in the Nigerian economy similar to 2018, although the growth prospect for 2019 is brighter. The beacon of optimism in the outlook for 2019 is the gradual improvement in the performance of the non-oil sectors and their contribution to GDP to GDP which is expected to continue in the short to medium term. The major downsides to Nigeria’s growth outlook for 2019 are significant fall in global crude oil price and disruption to optimal oil production. The downsides to global growth outlook are weak commodities prices and international trade tension. In view of these, we shall continue to be pragmatic in our projections while continually creating value for all our shareholders.